Good day,
In the battle for online shoppers, the nation’s largest retailers keep upping the ante by lowering the threshold on what qualifies for free shipping. Amazon (Nasdaq: AMZN) said it would offer free shipping on holiday merchandise orders of any size starting November 5. Amazon required a $25 minimum order to qualify for free shipping last year. The move comes a month after Target (NYSE: TGT) said it “plans to be America’s easiest place to shop for the holiday season” through offering free two-day shipping on all orders, regardless of size, starting November 1. Walmart (NYSE: WMT), too, plans to offer free two-day shipping on third-party items sold through its website. The moves illustrate the shipping ‘arms race’ occurring among retailers, says Moody’s lead retail analyst Charlie O’Shea, who says “free shipping is one of the easiest promotions to execute for a retailer . . . however it is a very costly initiative to undertake.” Last year, Amazon’s shipping costs hit $22 billion, while over the 12-month period ended September, its shipping costs reached $26 billion.
Did you know?
The dollar value of imports from China to the U.S. hit the highest monthly level in September, totaling just over $50 billion, according to the U.S. Department of Commerce. The last round of U.S. tariffs on Chinese goods went into effect as of the end of September, so many shippers have been eager to bring in goods quickly before facing higher costs. Overall, U.S. shippers brought in $394.7 billion worth of goods from China through September of this year, an 8% increase over the same period last year.
Quotable:
“This company made the decision to give a last, best and final offer and to stop taking freight. This could all have been resolved by the company addressing the key issues at the negotiating table.”
In other news:
Oil prices fall as Iran sanctions kick in
Monday marks start of the U.S. re-imposing sanctions to limit Iran’s oil exports. But waivers for key customers have lessened the bite. (CNBC)
It’s down to three for Amazon HQ2
The contest to woo the second headquarter for the world’s largest ecommerce retailer looks to be coming down to Virginia’s Crystal City, Dallas and New York City (WSJ)
China’s massive rail investment
The country’s Belt-and-Road initiative aims to lift freight by rail to over 1 billion tons by 2020 (Splash247.com)
Bad weather hits U.S. Southeast
Tornadoes, high winds and hail are expected through Lower Mississippi, Tennessee and Ohio Valleys through Monday (National Weather Service)
Tuesday’s the day to be extra careful
Fleet analytics provider Lytx cites factors leading to trcuk crashes, with drowsiness after watching Monday Night Football one potential source (Fleet Owner)
Final Thoughts
While transportation and logistics companies have come a long in their analytic capabilities, a report from management consultancy McKinsey & Company says the sector still lags its customer base in this area. In a survey of transportation and logistics companies, respondents said they achieved best practices in areas such as marketing, price and contract management and performance management around 30% to 40% of time. In contrast, most business-to-business firms did so close to 50% of the time with top-tier firms hitting best practices 60% to 70% of the time. “Overall, the sector’s commercial analytics capabilities lag the average performance of B2B companies, which suggests that there is considerable potential,” McKinsey said in the report. It says the lack of analytic capability is putting firms at a disadvantage with shippers, who use tools such as Uber Freight and Convoy to gain transparency into pricing. Transportation and logistics firms “are vulnerable because their increasingly sophisticated customer base has access to more products and services than ever and is adept at evaluating prices,” the report said. To rectify this, McKinsey says transportation and logistics firms need to locate data in their operations, invest in ways to make it clear and usable, and make its monitoring a daily routine. “Based on our experience, companies in the sector that embrace analytics can generate an additional 3 to 5 percent return on sales,” McKinsey said.
Hammer down everyone!